Monthly Archives: August 2015

Recently, members of the workers’ compensation industry met in Orlando, Florida at the 2015 Workers’ Compensation Education Conference.

At the conference, David North, President and CEO of Sedgwick, and Richard Victor, Executive Director of the Workers’ Compensation Research Institute (WCRI), spoke about the impact the ACA is having on workers’ compensation, and how it will impact it in the future.

As reported last week in Safety National’s article, four of the top five group health care providers have been involved in mergers and acquisitions this year, and anything that has had such a significant impact on healthcare, will also impact workers’ comp.

The speakers outlined five phases that workers’ compensation will go through to evolve and adapt to the ACA.

These are the five phases:

Awareness – developing an understanding of the ACA and its potential impact

Research – investigating the potential impact (where the industry is now)

Strategy – developing strategies to address ACA impact

Execution – implementing the strategies

Analysis – reviewing the strategies implemented and make adjustments

As previously written about in other posts, one of the biggest concerns for the workers’ comp industry is that the ACA will lead to cost shifting. And a big driver of cost shifting, according to North and Victor, is Accountable Care Organizations (ACOs).

How cost shifting to workers’ comp will occur is that physicians will have a financial incentive to push treatment to workers’ comp because the ACO will be paid a flat rate per employee, and therefore, the physician will not receive any additional compensation for treating the patient under group health.

The WCRI researched this and found that in states with significant penetration of capitated ACOs, there has been a 30% increase in workers’ comp soft tissue injuries due to being pushed out of group health.

This will also be a problem, the WCRI discovered, in states that easily allow for repetitive trauma claims that are not traceable to a specific date.

Mr. North and Dr. Victor stated that there will also be positive impacts as well. Because of the emphasis on wellness and incentives for employers to implement wellness programs will lead to a healthier workforce, this too will benefit workers’ comp.

Finally, the ACO models, with providers being incentivized based on outcomes and quality of care, will also be something work comp would benefit from, the article stated.

The speakers addressed two questions regarding the impact of the ACA; Is the ACA leading to higher healthcare costs? And what impact do you believe the Cadillac tax will have on workers’ comp? Will we see additional cost shifting?

The answer to the first question was “…yes. ACA was intended to increase coverage, not lower costs”; and the answer to the second question was “It depends. If employers respond to the Cadillac tax by increasing co-payments and deductibles to avoid the tax, then we will likely see more cost shifting to workers’ comp.”

What does this mean for workers’ comp?

It is undeniably clear that workers’ comp is going to get more expensive as the ACA leads to higher healthcare costs, but what is not clear is what the industry is prepared to do about it, what alternatives are they willing to try and explore, and what is holding them back from doing so?

The sad fact is that unless you have a title, attend multiple conferences, and make lots of money keeping the status quo the status quo, no one listens to you. And when someone does respond to your idea, they twist your idea into some kind of joke by inferring that you want to send injured workers to underdeveloped countries not ready for medical travel, or that you want to send them to countries that are ready for medical travelers, but they would not know about that because they have no knowledge about what is happening there.

In short, they are ignorant and uniformed about the quality of medical care available in those medical travel destinations that have been recognized as leading the way.

Instead, they pass their ignorance onto clients and others in the industry, without actually knowing the reality. Why do they do this? Because in some way, they or their friends, benefit from keeping others ignorant of alternatives, and so become hypocrites when they talk about changing the system, but all they are really doing is more of the same.

HEALTH CARE IS GLOBALIZING.

Both Mr. North and Dr. Victor said that what happens in healthcare affects workers’ comp. Or are they just lying?

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

From the ‘Better Late than Never’ department comes this article written last month from one of my LinkedIn connections, Paul Binsfeld, Founder & CEO, Company Nurse, a telephonic triage injury hotline, headquartered in Scottsdale, AZ.

According to Paul, nationwide, of all dollars spent on medical costs, approximately 60% are spent on workers’ compensation benefits associated with workplace injuries, and approximately 40% are spent on disability.

Paul also said that since medical costs are a significant cost driver to workers’ compensation benefits, many employers are taking steps to pro-actively manage the medical resources they use for their injured workers.

The rest of his article discusses the average costs of retail clinics, urgent care centers, and emergency rooms, and then highlights what his company can do for employers.

Nothing wrong with that. That is the business he is in, and he is marketing his business to potential clients.

But he does not address the very issue that this writer has been discussing for nearly three years now; how to get lower cost surgery for injuries common to workers’ comp?

Of course, I don’t expect him to, but you should. Because to not do so only makes the costs of workers’ comp more expensive, even if you find ways to pay less for immediate care. It’s when the meter starts running up if surgery is warranted that employers need to find alternatives for.

It’s up to you. Pay more here, or pay less somewhere else. Just don’t take my word for it.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Now that the summer is almost at an end, time to get back to the topic at hand…health care.

In an article late last week, Kathryn Mayer, Managing Editor of Benefits Selling magazine, wrote that nine in 10 employers said that they are facing increases in the premiums they pay for employee health plans.

Nearly 25%, or 1 in 4 employers are seeing rate increases in double-digits, according to research released last Thursday by Arthur J. Gallagher & Co.

Gallagher surveyed more than 3,000 US employers from dozens of industries around the country.

According to James Durkin, president of Gallagher Benefit Services, Inc.:

“Employers are examining all available options to rein in medical costs, while still offering competitive benefits packages that help them attract and retain the best employees in a tightening labor market, With the Cadillac tax due to take effect in 2018, employers are expected to turn to newer, alternative cost-control tactics.”

Employers are increasingly requiring employees to shoulder a larger share of the expense in higher deductibles, and Gallagher reported that 67% are cost-shifting [emphasis added] to employees.

Gallagher also said that in-network family plan deductibles average $3,000, while out-of-network deductibles average $4,500.

Annual deductibles for employee-only, in-network plans now average $1,200, and out-of-network deductibles are an average of $2,000.

About half of employers said they are considering changing carriers to lower costs.

Lastly, nearly all employers (97%), said they will continue to provide employer-sponsored coverage to employees.

Some of the other things Gallagher’s report said was that employers would offer health savings accounts to employees (36%), implement mandatory generic drug policies (15%), and offer reduced network access or narrow provider networks (11%). 35 % may self-insure, while 13 % might offer narrower networks in the next three years.

So, what does this mean to you?

If employers cost-shift the premium hikes to their employees, many of them might do the same, and cost-shift health care to workers’ comp, which has been discussed many times in the past.

One way Gallagher did not mention that employers should try, and why should they, because they can’t think outside of the box, is have them think outside of the border, and consider medical travel for surgery and certain medical treatments and procedures too expensive in the US, and especially if the employees cost-shift to workers’ comp.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

According to Ms. Gonzalez, employer costs for workers’ comp continues to rise, and benefits per $100 of covered payroll fell to 98 cents in 2013, which represents a 5% drop from 2009.

A growing, post-recession workforce has resulted in employer costs rising to $1.37 per $100 of covered payroll, a 5% increase from 2009.

Total workers’ comp benefits in 2013 were $63.6 billion, while employer costs were $88.5 billion.

John Burton, professor emeritus for Rutgers and Cornell universities said in a statement reported in the article, that “the decline [benefits as a percentage of payroll declined in 39 states between 2009 and 2013] is due to a drop in workplace injuries as well as changes in many state laws that made it more difficult for workers to qualify for benefits”.

Medical benefits account for a greater share of total workers’ comp benefits, Ms. Gonzalez wrote, due to rising health care costs, with these benefits at a 50% share in 2013 compared to 29% in 2009.

Costs for employers insured through private carriers constituted $54.9 billion, or 62.1% of total costs, while self-insured employers accounted for 17.3 billion, or 13.3%, while costs to the federal government were $4.5 billion, or 5.1%.

The greatest increases in employer costs in the 2009-2013 period were in New York and California. The biggest decrease was in West Virginia.

So, despite all the changes and challenges facing workers’ comp, the cost for employers is still rising, and the industry continues to do the same things over and over again, in the vain hope that next time the costs will come down. That maybe happening for some employers, somewhere in the country, but as Ms. Gonzalez states in her article, the opposite is happening.

I’ll say it again: It’s your choice. Keep doing the same old, same old, or think outside the box and outside the border. You are only wasting more money not doing so.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

For those of you in workers’ comp, this data is a reminder of what you deal with on a daily basis. For those in the medical travel industry, it represents areas you need to consider going after if you want to implement medical travel into workers’ comp.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Quotes

“Impossible is just a big word thrown around by small men who find it easier to live in the world they’ve been given than to explore the power they have to change it. Impossible is not a fact. It’s an opinion. Impossible is not a declaration. It’s a dare. Impossible is potential. Impossible is temporary. Impossible is nothing.”

– Muhammad Ali

“If people are not laughing at your goals, your goals are too small..”

– Azim Premji

“Those who say your dreams are ridiculous have given up on theirs.”

– Unknown

Permanence, perseverance and persistence in spite of all obstacles, discouragements, and impossibilities: It is this, that in all things distinguishes the strong soul from the weak.

– Thomas Carlyle

“As the work is done for the employer, and therefore ultimately for the public, it is a bitter injustice that it should be the wage-worker himself and his wife and children who bear the whole penalty.”

– President Theodore Roosevelt, 1907

To permit every lawless capitalist, every law-defying corporation, to take any action, no matter how iniquitous, in the effort to secure an improper profit and to build up privilege, would be ruinous to the Republic and would mark the abandonment of the effort to secure in the industrial world the spirit of democratic fair dealing.

– Theodore Roosevelt, 1908

“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.”

– John Kenneth Galbraith

“Only a fool would try to deprive working men and women of their right to join the union of their choice.”

– Dwight D. Eisenhower

“I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country.”

– Thomas Jefferson

“Mischief springs from the power which the moneyed interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges… which are employed altogether for their benefit.”

– Andrew Jackson

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption in high places will follow, and the money-power of the country will endeavor to prolong it’s reign by working upon the prejudices of the people until the wealth is aggregated in a few hands and the Republic is destroyed.”

– Abraham Lincoln

“Do not go where the path may lead; go instead where there is no path and leave a trail”

– Ralph Waldo Emerson

“Some men see things as they are and say why. I dream things that never were and say why not.”

“Capital is reckless of the health or length of life of the laborer, unless under compulsion from society.”

– Karl Marx

“The secret of change is to focus all of your energy, NOT on fighting the old, but on BUILDING the NEW.”

– Socrates

“Every man takes the limits of his field of vision for the limits of the world”

– Arthur Schopenhauer

“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”

– Arthur Schopenhauer

“You have enemies? Good. That means you’ve stood up for something, sometime in your life.”

– Winston Churchill

“No matter what people tell you, words and ideas can change the world.”

– Robin Williams

“There can be no equality or opportunity if men and women and children be not shielded in their lives from the consequences of great industrial and social processes which they cannot alter, control, or singly cope with.”

– Woodrow Wilson

“Although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative.”

– John Stuart Mill

“The masters of the government of the United States are the combined capitalists and manufacturers of the United States.”

– Woodrow Wilson

“The test of our progress is not whether we add more to the abundance of those who have much it is whether we provide enough for those who have little.”

– Franklin D. Roosevelt

“Of all the forms of inequality, injustice in health [care] is the most shocking and inhuman[e]…”